Seattle Social Housing Developer Acquires First Building

The Seattle Social Housing Developer (SSHD) has acquired its first building, Elara at the Market, a 150-unit apartment complex situated near the city’s iconic Pike Place Market and Waterfront Park. This acquisition represents a concrete step towards fulfilling the city’s commitment to expanding social housing options and tackling the ongoing affordability crisis.

Tiffani McCoy, interim CEO of SSHD, announced the purchase at a media event on Friday, highlighting the building’s prime location and excellent condition. The acquisition, approved by the SSHD board for $60.9 million, translates to approximately $406,000 per unit. Elara at the Market, built in 2018, comprises mostly studio and one-bedroom apartments, with some two-bedroom units on the upper floors.

Why it matters

SSHD plans to integrate this property into its mixed-income model. Half of the building’s units will be designated as affordable. Specifically, the first 15 vacant units will be offered to households at or below 30% of the area median income (AMI). An additional 45 units will be rented to households with incomes between 30% and 50% of the AMI. The developer also intends to maintain affordability for 30 units through the Multifamily Tax Exemption (MFTE) program, aiming for a total of 75 affordable units within the building.

Existing tenants will have the opportunity to remain in their homes, with SSHD pledging to freeze their rents for two years. A town hall meeting will be held in early July to introduce the SSHD model to current residents and address any concerns. The developer also plans to hire a resident liaison to support the building’s community. SSHD will forgo “junk fees” and will provide all residents with a free one-year ORCA transit pass.

Context

James Mayton, SSHD Director of Acquisitions, explained the strategic rationale behind purchasing an existing, high-end building in a desirable location. He noted that current downtown apartment prices are historically depressed, offering SSHD a significant discount to replacement cost. This approach allows the developer to acquire a revenue-generating asset and secure a valuable property that can be leveraged to acquire more sites and pursue new development. Mayton emphasized that while SSHD is also pursuing new construction, acquiring quality existing assets at a discount is crucial for piloting and perfecting their operational model.

Councilmember Alexis Mercedes Rinck, a proponent of the social housing initiative, spoke at the event, framing the purchase as a response to a “policy failure” that creates anxiety for renters concerned about rising costs and displacement. Deputy Mayor Brian Surratt echoed these sentiments, underscoring that social housing is now a reality in Seattle and a vital component of addressing the city’s housing affordability crisis. He highlighted that investing in affordable housing is not only a social strategy but also an economic one, as it increases residents’ spending power and fosters greater stability within local businesses and communities.

The SSHD board has also discussed the potential for future sustainability upgrades, including the possibility of replacing the building’s gas boiler with a heat pump to enhance energy efficiency, aligning with the developer’s environmental goals.

Key facts

• Building Name: Elara at the Market
• Unit Count: 150
• Purchase Price: $60.9 million
• Affordable Units Target: 75
• Target AMI for Affordable Units: Below 30% and 30%-50%
• Rent Freeze for Existing Tenants: 2 years
• Developer: Seattle Social Housing Developer (SSHD)

This acquisition by the Seattle Social Housing Developer signifies a shift in the city’s approach to housing, moving beyond traditional market-rate development to create a more inclusive and affordable urban environment. By securing a prime property and implementing a mixed-income model, SSHD aims to provide stable, affordable housing options while also generating revenue to support future development efforts. The focus on existing tenants and resident support services underscores a commitment to community well-being.

Source: The Urbanist, https://www.theurbanist.org/seattle-social-housing-developer-acquires-first-building-near-pike-place-market/